GUY RAZ, HOST:
Hey, everyone. So have you ever gotten tongue-tied when someone comes up to you and says, what do you do? Well, if so, I'm going to talk to someone who has some advice about that very situation. Her name is Joanna Bloor. She's a startup expert who basically helps people write their own mission statements. Joanna and I will be having a live conversation in a webinar on Thursday, September 13. This webinar is free. It's supported by GoToMeeting. And it's connected with our upcoming summit in San Francisco. And by the way, the summit is now sold out. But if you sign up for the webinar, you will be eligible to win a free ticket to the summit. So to register for the webinar, go to summit.npr.org/webinar. That's summit.npr.org/webinar.
And one more thing before we start the show - if you've ever worked at a communal working space, they're, like, almost as common as cupcake shops these days. But initially, the founders of WeWork had a really hard time selling that idea to the landlord who rented them their first space. And now, today, the company has almost 300 locations worldwide. How they did it - well, you will love this story. It first ran in June of last year, and here it is.
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MIGUEL MCKELVEY: So they showed it to us. I'm like, wow. Like, for me - I was coming from a design background - like, this is sick. This is as good as it gets. And they're basically, OK, here's the building. What would you do with it? So basically, I go home, and I start thinking of a concept, of a name. I buy the domain. I build a website. I design some floor plans - really simple - do, like, a quick, like, business model. I stayed up all night.
RAZ: Wait. Wait. You did this in one night?
MCKELVEY: Yeah, basically because we had been challenged with, like, what are you going to do? And we have no credibility, right? So my thought was, if I do all this stuff and come back tomorrow, it'll seem like we were planning it for weeks in advance, right?
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RAZ: From NPR, it's HOW I BUILT THIS, a show about innovators, entrepreneurs, idealists and the stories behind the movements they built.
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RAZ: I'm Guy Raz. And on today's show, how two friends hustled their way into Manhattan real estate and in just seven years built a $17 billion office-sharing company called WeWork.
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RAZ: Let's say back in 1985 someone pitched you on an idea to build a chain of stores that just sold coffee. Or say in 2008 a friend asked you for some seed money to create a service that allowed you to rent out a room in your home to a total stranger, or if in 2010 someone told you, hey, you know, I want to open up a salon that only blow dries hair - no cuts, no color, just blowouts. I know what you're thinking. You're thinking, I would totally jump aboard. But the reality is, in the early days, almost no one thought Starbucks, Airbnb or Drybar were going to work because who would need that one to service, right?
And that's what lots of people asked Adam Neumann and Miguel McKelvey a decade ago when they started to pitch landlords on the concept of leasing out unused parts of their buildings for shared work spaces. But not just any work space. A membership would include good coffee, foosball tables, great lighting and decor, exposed brick, comfy chairs and nooks and, most importantly, a built-in community. And today that idea they had is called WeWork. It has buildings across the U.S. and in more than a dozen countries around the world.
But long before that happened, long before the vision of a communal workspace was even on Miguel McKelvey's radar, he was actually living a communal life. Miguel was raised in an all-women hippie collective in Eugene, Ore.
MCKELVEY: There were five women who were all really good friends, you know, best friends for a long time. They had all pretty much decided to have children without the fathers in the picture just because it was a time when they wanted to break free from normal sort of arrangements and configurations. And they all depended on each other for everything, sort of like we were a family - the five women and then their children - so me plus four girls and then 10 years later a little brother who showed up.
RAZ: But basically, those five women were the parents. So they - like, any of them could be in charge at any point.
MCKELVEY: Exactly. And we all had, you know, all the holidays together from Thanksgiving to Easter to Christmas. Like, that was our family. Like, we were - everyone was pretty disconnected from, you know, their other biological family. And that was - you know, that's what I grew up with. And I consider them, like, my moms, my aunts, you know, whatever you want to call it, and my brothers and sisters.
RAZ: Did it feel different when you were a kid, or was it just like, that's Eugene, Ore., and it's kind of - there's like a vibe here?
MCKELVEY: Yeah. I mean, there was a hippie vibe amongst the smaller community there. And there was, you know, kids with funny names. You know, like, I remember a kid named Wind, you know, and another - there was Morning Star and Evening Star. So that made me feel not too weird. I think not until I was older and I realized that there was people who kind of had money that it became an issue, like, things that I didn't have and the fact that we always had super crappy cars that were always breaking down and, like, billowing big clouds of smoke.
I would say it was more like the sort of, like, being poor than the, like, being weird from a family, you know, sort of scenario. But at the same time, I wouldn't say I wanted to get out. But I did from a very young age have a dream of something bigger. So for some reason, from the time I was a kid, when it would be, like, say, a really boring summer day, I would be like, you know, what do you want to do? What do you want to do? I don't know.
MCKELVEY: And I would say, I want to go to New York. And for some reason, I started saying that when I was a kid. And I think it, like, became more and more of a thing the more I said it and the more it became real. And it wasn't from, like, a oh, I hate this place; I've got to get out of town. It was more just aspiration, you know, for something bigger.
RAZ: Wow. So - all right, so you grew up in this environment. And you are one boy among lots of women.
RAZ: You're the...
MCKELVEY: ...All women.
RAZ: Yeah, all women.
MCKELVEY: Pretty much.
RAZ: Basically four sisters and five moms.
MCKELVEY: Yeah. And I mean, looking back on it, it was weird in the sense that, like, I didn't have - like, I look at it now in terms of, like, say, my own son and the role that I play in his life. And I realize things that I didn't have at all. You know, my mom did develop, say, a love for sports over time. But when I was younger, she had no knowledge or interest in sports at all.
RAZ: And you loved sports.
MCKELVEY: Yeah, I mean, from a young age, I did. But I didn't have much guidance, you know?
RAZ: And what'd you play?
MCKELVEY: Well, I played basketball, but never - I didn't play it seriously until I was really in high school. So, you know, I was like a kid just hanging out with a ball but not, like - I didn't have any skills until much later.
RAZ: And I should mention, you are sitting across from me in the studio. You are 6-foot-8.
MCKELVEY: Six-foot-8, yeah, on a good day.
RAZ: On a good day.
MCKELVEY: Yeah, and actually, I can still dunk. I'm proud of that. I tried a couple of days ago. That's a good skill to have at this height.
RAZ: OK. So Miguel - he wasn't just any basketball player. He was actually really good. He ended up making the team at the University of Oregon. And though he was good, he wasn't NBA good. So he focused on his studies and got a degree in architecture. After college, Miguel spent a few years trying to build a startup in Japan. It was a company that helped connect pen pals. But in the back of his mind, he still had this dream to live in New York and maybe even work as an architect there. So in 2004, he started applying for jobs.
MCKELVEY: So first of all, no one - this is something for everyone to learn, at least in my experience, is that in New York, no one's going to reply to you if your address on your resume is not in New York because who cares? Like, who wants to deal with it, you know? So I learned - I had a friend, who - my friend's brother, who was living there. And he was like, you can use my address. And I changed my address to his address in Queens. And immediately I got responses. So just that one switch.
MCKELVEY: But I got, I think, three interviews. So I flew out. And I think it was a Wednesday. And I met with one firm. They were all super, like, chic architects and, like, they're all black and, like, cool glasses and super slick office and all that. And I was like, I know I don't fit in there. Like, that's not for me. And then the other one I went to was in Dumbo in Brooklyn. And it was just two guys in this tiny little office, like - and they were in jeans and T-shirts. And, you know, they had, like, a really relaxed vibe. And, you know, I talked to them. And basically, this guy, Jordan Parnass, who was the owner of the firm, he was like, OK, great, we like you. We need you. We're really busy. Can you start tomorrow?
MCKELVEY: And I'm like, um - because I had said I lived in New York, right? So literally, I have nothing with me. I'm like, well, you - can I have a week, you know, 'cause I...
MCKELVEY: ...Was trying to make up a lie on the spot of, like, why can't I start tomorrow? And we negotiated. And basically, he let me start Monday instead of Thursday. And so I went back to Portland. I literally packed up my entire apartment. I called my mom. I'm like, Mom, take all my stuff. You know, she packed it up and put it in her - back of her car. And I moved to New York with a duffel bag on Sunday night. I remember I landed and never looked back.
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RAZ: And, I mean, you were young, but you weren't, like, just out of college.
MCKELVEY: I was 30.
RAZ: You were 30.
MCKELVEY: I was 30, so I was old. I mean, I was old for, like, being willing to...
RAZ: Somebody starting out from scratch, right?
MCKELVEY: Yeah, and the job was $10 an hour. So, I mean...
MCKELVEY: ...I was - and it wasn't like I had money in the bank because...
RAZ: They needed a certified, professional architect for 10 bucks an hour?
MCKELVEY: Well, I wasn't a certified, professional architect, right? I was a junior-level...
MCKELVEY: ...Draftsman. Like, I was the lowest on the totem pole. That's what they wanted. They wanted a person they could pay little, who would do odds and ends jobs, which is...
RAZ: And you weren't worried about taking that risk at all?
MCKELVEY: No, because I think, one, it was I get to move to New York, which was the big-picture goal. And that was, you know, getting my foot in the door. But two, what did I have to lose? You know, I mean, I didn't - it's like, I didn't have anything to my name. I didn't have any money. There's just nowhere I - there was no way I was going down. You know, worst-case scenario, I move back to my mom's house in Eugene for a while and figure stuff out.
RAZ: And what was the job like? Did you like it? Was it fun?
MCKELVEY: So what happened there which was really cool is that the - Jordan Parnass had grown up with Dov Charney in Montreal. So Dov is the American Apparel...
RAZ: The infamous Dov Charney, yes.
MCKELVEY: Exactly. And so originally, when I first went there, the project that they had was an American Apparel store. And it was in, you know, Lower Manhattan. There was one they had already done, and then they were working on the second one.
RAZ: Do you mean to design it or to, like...
MCKELVEY: Yeah, design it and manage the construction...
MCKELVEY: ...And build-out.
RAZ: That's kind of a big deal for a two-person firm.
MCKELVEY: Yeah, it was. But also, American Apparel - this was their first retail, right? So they were...
MCKELVEY: ...A wholesale company.
MCKELVEY: And they were just exploring, could they do retail? And so it was great timing because, one, getting there at that time when American Apparel was just starting out was great. But two, my background being in business actually was applicable to this new idea of retail rollout. And so what ended up happening was over the course of, you know - starting out in more project management roles, like, OK, now we have two American Apparel stores. Now we have three. Now we have four. Now we have five. It turned from that, which was actually managing a project, to now we've got - in the office we have 10. Now we're doing 20. Now we have 40 concurrent projects.
RAZ: Wow. That was how fast and explosive their growth was? I mean, you joined this firm in 2004. And like, within just a few years, you're doing, like, to 30, 40, 50 stores - American Apparel stores.
MCKELVEY: Yeah, I think they were to 200 after four years or so.
RAZ: That's crazy. So, I mean, you got to this firm at just the right time when they just, like, landed this really interesting deal. And clearly that was going to change your life.
MCKELVEY: Yeah, I definitely had the attitude that - this feeling that every potential thing that's going to come up is something I'm going to use in the future. And so the American Apparel projects were tough. I mean, we were under, like, really tight time frames. And Dov was, like, really intense. And, you know, there was times - I remember a day - Black Friday. It was on obviously the Friday after Thanksgiving. And I remember him calling me and saying, like, we have to have this store open. There's a problem in Denver. If we're not open, I'm going to kill you, you know...
MCKELVEY: ...Something to that effect. And he was like, this is the most important - I remember one of the things that he said - this is the most important moment of your life right now. You have to get on a plane right now to Denver and make sure this store opens on time. But it was like, once you've been through that, it's sort of like, well, what's going to come up that will be worse? What's more intense than having this person scream at you at the top of their lungs and to respond to it in, like, a positive way and say, hey, I'm going to take this experience and know that I can learn from it and do something with it?
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RAZ: So when you were - when you were at the firm, did you - in the back of your mind, were you always thinking, I'm going to eventually start my own firm, or I'm going to start my own business? Or did you think, OK, this is cool; I can keep doing this for a long time?
MCKELVEY: So there was definitely an expiration for me in terms of I think really the learning curve. When the learning curve expires, that's when I start looking for other things. So I think once we'd done a whole bunch of American Apparel projects and I'd sort of seen it before, I started thinking, well, what else am I going to do? And this is - kind of starts the WeWork story - is that while I was working for the firm, I had a co-worker, this Israeli guy named Gil. And I became friendly with him. And we, you know, were...
RAZ: He was also an architect.
MCKELVEY: Yeah, he was an architect working on American Apparel projects. And we became friendly. And I remember, you know, he invited me over to his apartment one weekend. And I went over there. And as we're walking into the building, I think, in walks this other dude. And we get introduced, and it's Adam. It's a hot summer day, and he has...
RAZ: This is Adam Neumann, your partner now at WeWork.
MCKELVEY: Yeah, Adam Neumann. And he's got his shirt off I think, which - just to walk into a New York, you know, condo building, rental building elevator with no shirt is one kind of statement. And then, two, I remember as we're, like, you know, going up in the elevator, he's starting conversations with people who are on the elevator. And then he's, like, holding the door as the person get off and then continuing the conversation.
And I don't know Israelis at all. So first of all, I'm coming from Oregon. I've never met an Israeli before. So I don't even know this sort of abrasiveness which I've come to love. But there's that. And then there's Adam, who just has, like, a really, you know, exuberant sort of personality.
RAZ: Was he just a guy who lived in the building or...
MCKELVEY: So he was Gil's roommate. So...
MCKELVEY: ...What - I didn't know that at the time, though, because, I mean, I didn't understand. Like, it wasn't like I had been pre-introduced or knew the situation or what I was coming into. But sort of on that elevator ride, it was all explained to me along the way.
RAZ: So you and Adam just like hit it off right then and there.
MCKELVEY: Yeah, and that sounds weird 'cause...
MCKELVEY: ...It doesn't really make sense. I mean, aside from the fact that we're both tall, we don't have that much in common. I mean, we're totally different people. For whatever reason, we just connected. We just - there was something between us that just sort of made sense.
RAZ: What was he doing at the time?
MCKELVEY: So he had a couple of startups. One of them - both of them I think were baby clothing companies. And he had sort of an idea for innovating a baby clothing by putting kneepads in babies' pants so...
MCKELVEY: ...To protect their knees. They were called crawlers, which...
RAZ: Did he have a baby at the time?
MCKELVEY: No, no baby. I don't understand where the whole baby thing had come from. I'd - we'd have to ask him to remember. But, you know, he was interested in succeeding in business. And he thought that was a good idea. And so he was pursuing it. And that's actually - the way we became closer friends was he was looking for a new office for his baby clothing company. And he was looking at spaces in Manhattan. And I was like, look; you're going to get double the space for half the price in Dumbo, you know, in my building where I am.
RAZ: In Brooklyn.
MCKELVEY: In Brooklyn. So I convinced him to move there. And so then he was just down the hall from me where I was working at that - at the firm on the American Apparel projects.
RAZ: Did you find a kind of charisma in Adam that you felt you didn't have?
MCKELVEY: Yeah, I think so. I mean, it's more like - yeah, it's a - charisma's a good word for it. It's also more of a brashness, which I think is cool but which I don't have. Like, I can't...
RAZ: You don't like to be the center of attention.
MCKELVEY: Well, I like to be next to the center of attention, though. That's the thing, is that, like, I like the idea of it. I just don't want to be it.
RAZ: Got it.
MCKELVEY: So - but I really enjoy the energy that sort of comes from that. Like, I like that. I like seeing it.
RAZ: So what happened? Did he one day come up to you and say, I have an idea, and I want to do it with you? Is it that seamless? Or is it a little more complicated than that?
MCKELVEY: So it's hard to say exactly that moment. Like, it's hard to remember. But, yeah, something to the effect of we're talking about this building that we're in, and we're looking at the relationship between all of these tenants - cool companies - and then the level of service that they're getting from the landlord. And he had seen sort of the business model before of, like, office suites, which I wasn't familiar with. But he was like, I think if we make, you know, these office suites, we can make money - we can make more money than the landlord is currently charging.
RAZ: So basically his idea was to just create, like, a bunch of shared offices in cubicles and then to just rent them out.
MCKELVEY: Exactly. So I mean, nothing too complicated other than just, like, hey, right now they lease you an empty space with, you know, 2,000 square feet minimum. And you're basically - as a small business, you have it in your own hands to figure that out. You know, you have to build it out. You got to buy all your own furniture. You got to sublease space if you can't fill it all up. Like, you're facing all those challenges. And you're paying a good price, which at the time was, you know, 20 bucks a square foot or whatever, which you know, is a good deal.
But it was just a very low level of service. And so I think he brought to me that idea. And I was like, I'm - sounds great. The challenge was is that neither of us really had experience in real estate or anything. And so he would go to the owners of this building, 68 Jay, and say, hey, we see there are floors that are available here. Will you lease one to us?
RAZ: There were just empty floors in that building.
MCKELVEY: Well, so they were, like, redeveloping the building over time.
MCKELVEY: They were kind of going floor by floor and trying to, like, you know, move people around to - because they wanted to make more rent. So they were kind of like improving - because it was really crappy. I mean, it was, like, in bad shape. So they were trying - you know, they had enough thought to say, hey, let's redevelop this. We can charge more money.
MCKELVEY: And so he started going to them and saying, lease us a whole floor. And at the time - and I don't remember a floor plate there, but it might have been, you know, 10,000 square feet or 14,000, 15,000 square feet. And they're just like, who are you? You're, like, the baby clothing guy who can't even pay your rent on time, you know?
MCKELVEY: Why would we rent to you? It makes no sense. Like, you don't know anything about it. Like, we're the experts. We own a hundred buildings, like...
RAZ: Fair enough.
MCKELVEY: ...You know? And they just kept saying no. But credit to Adam - and this is part of his, you know, innate ability to, like, continue to press even when people say no - he just kept going back and back. And I don't know, it was every week for probably, you know, weeks on end.
RAZ: And it's not like the two of you sat down together and said, let's incorporate. You were just doing your thing. He was trying to do this.
MCKELVEY: Yeah, and we had no business plan. We had nothing. It was a very simple idea of, like, hey, could we break up this space in some way? I mean, no real plan. It was just a simple concept.
RAZ: And the owner of the building kept saying no.
MCKELVEY: So he was saying no, no, no, no for weeks on end. And then one day, apparently - and I wasn't there at the time - but he says, OK, I'm not going to give you a floor in 68 Jay. But I have this other building across the street which I've been clearing out. You know, come take a look. And so Adam said, hey, let's go look at this building. And it's beautiful. It's, like, perfect, you know, Brooklyn warehouse building - exposed brick, exposed timber, you know, beams and columns, big windows, views of the water. It literally, like - you know, ideal building for the cool, like, you know, startup Brooklyn vibe. And they're basically - OK, here's the building. What would you do with it?
And I'm like, what are we going to do? Adam's like, I don't know. I'm like, OK, I'll figure it out. So basically, I go home. And I start thinking of a concept, of a name, come up with Green Desk, which is office space oriented towards people who are environmentally responsible. I buy the domain. You know, I build a website. I design some floor plans - really simple - do, like, a quick, like, business model. Basically, I remember I went to Kinko's and had business cards made, had some little, like...
MCKELVEY: ...Promotional flyers. Basically put - I stayed up all night, basically...
RAZ: Wait. Wait. You did this in one night?
MCKELVEY: Yeah, basically because we had been challenged with, like, what are you going to do? And we have no credibility, right? So my thought was, if I do all this stuff and come back tomorrow, it'll seem like we were planning it for weeks in advance, right? And we show up the next day with this whole thing. And they're, like, kind of blown away, like, oh, like, whoa. You actually...
RAZ: Have a company.
MCKELVEY: You actually have something real here. And that was really - you know, and of course Adam sold it. I mean, I'm - presented the stuff, but he's the one who...
RAZ: I mean, knew guys were BSing (ph) a little bit...
MCKELVEY: Of course.
RAZ: ...Because you had no money.
MCKELVEY: Of course. We have nothing.
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RAZ: In a moment, how Adam and Miguel went from BSing to building their first space literally by hand. Stay with us. I'm Guy Raz, and you're listening to HOW I BUILT THIS from NPR.
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RAZ: Hey, welcome back to HOW I BUILT THIS from NPR. I'm Guy Raz. So it's 2008, and Miguel and Adam convince a Brooklyn landlord to give them one floor in a building to start their company. And the idea is to create this really cool-looking space where people can rent out offices. And the company at this point is called Green Desk. And even before they finished preparing the space they started to advertise.
MCKELVEY: Well, I remember the day when we first did it. We put masking tape down on the floor to sort of show the layout of the workspaces. And we posted ads on Craigslist. And people started calling, you know, my cellphone. And I would meet them and tour them through the building with just masking tape on the floor. And people started signing up from just the masking tape...
MCKELVEY: ...On the floor. And that's - that just showed how different it was - one, 'cause it was cool. And we had a list of all the things we're going to offer. You know, we're going to give you coffee. We're going to have cool events, this kind of stuff. And people needed it.
MCKELVEY: They believed in it.
RAZ: ...The idea was that you would get a permanent workspace that would be yours, or what?
MCKELVEY: Yeah, so the thing that was happening back then was there was - there were existing sort of corporate office suites, and then there was co-working, which at the time - co-working is primarily tech-focused. It's a lot of, like, you know, engineers in a big open room, headphones on, at your computer. And there was some of those. It wasn't, like, prevalent. But, you know, there was some in San Francisco, a few in New York.
And they were primarily, like, oriented towards a group of people who kind of all knew each other. And then they're going to come together. And then they all want to work together in the same room. And then they invite some others. Adam and I didn't come from that at all. We were in this Brooklyn environment. We weren't from tech. And we were much more interested in this, like, diversity and all these cool different kinds of companies and what that energy is when they come together. That said, all those businesses are doing, like, real sales. They're on the phone. They're having meetings. They're talking to people. So this idea of, like, a big open room just didn't work for us. It didn't make sense.
And so I think when we first started, it was more like, you're going - we're going to do small offices. You could have, like, a small, you know, 5-foot-by-7-foot, one-person office, have two-person, four-person, six-person, eight-person office - I think at the time maybe a 12 was the largest we did. And that was, you know, all glass partitions, so very open and airy. And it was really, like, you know, hey, join a group of people working together, but you're still in your own private space.
RAZ: And what did it cost to join?
MCKELVEY: I think at the time we were probably starting at, like, $300 for, like, the lowest end. And, you know, it went up to, say, a thousand for a four-person office - you know, ballpark. It wasn't expensive when you look at the overall net cost, but also not cheap. It wasn't like, hey, this is rock-bottom price or something.
RAZ: So this is, like, 2008, like, right before the financial crash.
MCKELVEY: Yeah. And, you know, that I think positive and negative in the sense that, one, the world was changing very quickly, and there was people who were thinking about things differently. You know, perhaps, like, working at Lehman Brothers or whatever is not, you know, the best thing for your life, whereas, you know, it could have been before. We have some members like that, who are like, oh, I used to be X for this company, and now I want to sort of do it on my own.
RAZ: So how many people did you sign up for that first space?
MCKELVEY: So, I mean, I think each floor in that building was a little under - maybe it was 70 people or so.
RAZ: And how many floors did you guys have?
MCKELVEY: So we had five floors. So I think that building was about 350 members. You know, it filled up very fast. And then we expanded back to 68 Jay, which was the cool thing because we went back to the building they wouldn't let us have in the first place and started building out more space there.
RAZ: And you designed it on paper, basically. You became the architect.
MCKELVEY: Yeah, so Gil was also our partner at the time. So there were three of us, and we worked together. Gil, you know, worked on...
RAZ: Who was also an architect.
MCKELVEY: Yeah, he was an architect, so he helped with that. And then - but he was still working at American Apparel or with the firm that did that. And then Adam was still working for the baby clothing company. So I was basically the operator. So I did all the stuff to get the business going. And I really was, you know, there - whatever - 18 hours a day putting the whole thing together and really running it, you know, as a very small business.
RAZ: And so did you guys start to make money off this, like, very quickly?
MCKELVEY: Yeah. So the challenge there was it was a good business definitely right off the bat. And we were profitable. But the problem is that it's capital intensive. So we did the first building under our 50-50 agreement, and we started thinking big. We're like, this is amazing. Everyone loves it. We're going to grow. And we started looking at Manhattan, looking at San Francisco, thinking of other locations. But they had a portfolio that they already owned...
RAZ: The owners.
MCKELVEY: ...The owners of the buildings.
RAZ: OK, yeah.
MCKELVEY: So it was in their interest to use all the real estate in their own portfolio. So they're showing us their locations in Brooklyn. We're thinking about building a big brand and thinking, this is, like, a worldwide phenomenon. Like, we're going to change the world. We're doing something really cool. And they're thinking, let's fill up all our existing buildings that have vacancy. And so as soon as we started talking about, like, other bigger things, it just showed this is not a partnership that's going to work long-term.
RAZ: So you left.
MCKELVEY: So we sold. So we sold to them. They got a great business, which they're still operating. And we got some money to start over again.
RAZ: So they own Green Desk? Green Desk...
MCKELVEY: They own Green Desk. They still operate it, and it's a nice little business for them.
RAZ: And what did you guys walk away with?
MCKELVEY: I wish I remember the details. But, I mean, we must have gotten, like, somewhere between half a million and a million dollars each. I mean, it was a good amount of money. And I think it also presented a challenge in that we had to ask ourselves, like, do we take this money and put it in the bank? Or do we, you know, sort of go forward and invest it in the next thing? And I think for Adam and I, it was clear - like, we're on to something big here. And let's roll with it and keep going. And I think for Gil it was a little bit different. Like, he saw this money and was like, hey, I can move back to Israel. And I've got a bunch of money in the bank and, hey, my life is good.
RAZ: And he did that.
MCKELVEY: And he did that. So you know, that was good for him and a good result. For Adam and I, it was enough to say, OK, let's switch focus completely to this business.
RAZ: And did you create a - you had to create a new name and a new brand and all this stuff, right?
MCKELVEY: Yeah. So I think one of the things that we learned at Green Desk that was super important was when it was really working, what was cool was the connection between people. And the things that you would hear people say to each other in support of each other even though they're in completely different industries - just, you know, late at night there's across the hall people having these really cool conversations about life, about business.
And then there's also something that happens of almost, like, accountability because one of the things about being in a small business, especially on your own or if you're owner of a small company, it's like, no one's watching you to see if you show up in the morning, right?
MCKELVEY: But one of the coolest things that happens is, like, you know, people become accountable to each other even though they're not working for the same company. So if you don't show up for a couple days, someone actually asks you, like, hey, where you been? So that's one of the cool things that happens is sort of, like, hey, we're all working together even though we're separate, you know?
RAZ: So - OK, so obviously at this point you could not be Green Desk anymore. So how did you start to come up with a new name?
MCKELVEY: So the problem that we had in trying to reinvent the business is like, what do you call that? You know, what is the name for a community-oriented business, you know, without it sounding too, like, hippy-dippy? Like, how do you come up with something that suggests the idea that we're all together and that we want to, like, be open and connected to each other but doesn't have these words in it that sort of sound too, like, over-the-top in terms of, you know, saying, hey, let's all hold hands?
RAZ: So WeWork.
MCKELVEY: (Laughter). Yeah, and I think it took a while to get there. What actually happened - I think literally in the middle of the night, Adam's friend Andrew (ph) just literally came out with it. And he said, it's WeWork. It's we live. It's we sleep. It's we eat. It's we - like, just flowed with this whole thing. And it was a dialogue that was months old that just happened in a moment for him in the middle of night. And as soon as we heard it, we're like, that's it.
RAZ: So where was your first stop? Where did you go to find your first place?
MCKELVEY: So we looked in Manhattan a lot. We did have a noncompete with our Green Desk partners, so we had...
RAZ: I would imagine, yeah.
MCKELVEY: ...A limited number of areas we could go. So we were looking in San Francisco and also in Manhattan. And it was tough. I mean, we had a lot of conversations with people who were like, again, who are you; you have no background in real estate, and also people were looking for big credit tenants. I mean, especially in that environment of the financial crisis, a lot of landlords had been burned even by credit tenants who, you know, broke their lease and went bankrupt or whatever. So very few people wanted to work with us. And we looked at a ton of spaces. And everyone just said, why? You know, who are you?
And so really what happened - I mean, it was a friend of a friend of a friend knew somebody, and somehow we connected for this building in SoHo. And it was really a relationship sale. You know, Adam again, like, had his persistence. And he was willing to go over and over and over to the owner and just convince him that we were the right tenant for this building. And he - you know, he's good at making connections with people. Once that door is open, like, if he sees a crack and he can get in there, then he's never going to stop until...
RAZ: But how did you put the money forward for that? Did you guys have the money?
MCKELVEY: Yeah. So we had the money from the Green Desk sale. So we - which was enough for the security deposit. And, you know, again, we're coming out of a financial crisis. So it's not like this landlord has a ton of other options. They're not like, oh, there's all kinds of companies clamoring to move in. So we're in, like, a good place from a real estate perspective because we're saying, we'll take your whole building. And there's not that many other tenants for it.
RAZ: What did the building look like? Was it ready to just rent out to people? Or did you have to gut it and, like...
MCKELVEY: Not at all ready - full gut. It was actually in terrible condition. So...
RAZ: But how much money did it - was it going to require to renovate that building?
MCKELVEY: Probably in the order of a few million dollars.
RAZ: Wow. Because you had a vision of what you wanted it to be, right? Like, I'm imagining, like, you know, hardwood floors, like, sort of distressed wood floors and beautiful appliances and - right? - I mean...
MCKELVEY: Yeah, so we were more conservative back then in terms of our investment. You know, we did all - a lot of the work ourself. I mean...
RAZ: The - the actual labor.
MCKELVEY: Yeah, there was a limit to how much they would build versus us. And so we had some responsibility. One of our responsibilities was IT wiring, all the cabling. And so we were out there getting bids for IT wiring. And I remember we got one for a hundred thousand dollars and one for, like, 87,500. I remember getting those estimates and being like, a hundred thousand dollars is a pretty round number for wiring. Like, shouldn't you have, like, a more detailed calculation of how much that costs?
So my little brother and I - he's - background in - he was pre-med. And he's, like, kind of a research scientist as - in his brain. And he had moved out to help us. It was me, Kyle and Adam at the time. And, you know, I'm like, hey, why don't we look into how this actually works? And the way his brain works is then to break it down into, like, the most micro parts, basically every cable run. How long is it? How many terminations? You know, how do you do terminations?
Then, I mean, I remember he estimated it's going to cost us $8,000 in materials and then, you know, whatever, like, 50 hours of labor or whatever the number was. It was some crazy small number relative to this hundred thousand-dollar price. And so we're like, well, it's not rocket science. Like, we can do that ourself. And so we just did it ourself.
RAZ: Wait; you wired the building yourselves?
RAZ: You were, like, laying the wires out and...
MCKELVEY: Yeah, all of it. So we - you know, we had to get, like, a hammer drill and, like, drill into the brick to hold, like, brackets to hold the wire. We had to - I mean, that was so much fun. It was - like, it was crazy, but it was also like, we're really fully engaged. And we had to, you know, teach ourselves how, you know, to connect patch panels and program switches. And, you know, so we put in that whole infrastructure. I remember one of the things we had to do is actually - it's this thing called soda blasting, which is if you want that cool, like, exposed brick and it's been painted, you have to blast the...
RAZ: The paint off, yeah.
MCKELVEY: ...Blast the paint off. There's this thing called soda blasting where you use baking soda to do that. And, well, you have to buy baking soda by, like, the 50-pound bag. And you need bags and bags and bags of it. So I remember we would, like, rent Zipcars, drive out to this place in New Jersey, load up the car with, like, these bags of baking soda. And we'd put so much in there that it would be like riding on the wheels, on the tires.
So we'd be, like, driving back from New Jersey through the tunnel, and you'd hear this, like, (imitating screeching) as the tire's, like, running on the back of the, you know, the wheel well. But that was what we were doing. It was like every step was like, we're going - and we rented the equipment, the soda blasting equipment just to, like, do it ourself. We had a compressor on the streets of Manhattan just sitting out there, like (imitating whirring) - like, the compressor's running out there. And, like, there's all this baking soda billowing out of the windows upstairs. It was awesome.
RAZ: So - OK, so from the time that you sign the lease to when you open the first floor, how long was that?
MCKELVEY: A few months - so three months, probably, maybe a little less.
RAZ: And how did it look? Take me into that first floor that you opened up.
MCKELVEY: Yeah. So when you walk in, you basically have, you know, an old wood floor, which we refinished and had a lot of that cool character - hundred-year-old wood floor. You have exposed brick, which, again, we soda blasted to sort of bring back to that rustic sort of vibe. We had iron columns that were cool and had character.
And then what we sort of inserted into that was sort of a sharp, modern, you know, glass and aluminum system. So you have this play between the old and the new. And then another thing was, like, from the very beginning, I didn't want it to have an officey (ph) vibe at all. And again, this seems not like a big deal now, but back then we did...
RAZ: Back then, 2010.
RAZ: Seven years ago.
MCKELVEY: How quickly things changed - I mean, back then we did all incandescent lighting. To do that in a workspace at the time - it just didn't exist. You had, like, a cool Brooklyn restaurant in an old auto garage. You had, you know, other people, say, doing boutique hotels with that vibe. But in a workspace, no one did that at all. So it was totally unique. There was nothing like it.
RAZ: How many people joined up by the day you opened?
MCKELVEY: I think when we first opened the first floor, we were probably in the 70 to 80 percent range.
MCKELVEY: And then within the first couple months, the first two floors were pretty much full.
RAZ: So once this building - like, once people started to join up and this thing started to really take off, was the idea immediately to go out and get investors and, like, scale this - make this huge?
MCKELVEY: OK, so part of the story which we didn't talk about is before we even built the first location, we actually had an encounter with a potential investor who was in a room for one of these potential real estate deals. So we were pitching a building. We really wanted to get this cool building down on Canal Street. And the owner of it was like, you know, I'm not sure if I'll give you the building, but I got this friend who might be interested. And he's going to come over.
So this guy shows up at the meeting, sits down, doesn't really speak to us. We shake hands. But these are, like, you know, Orthodox Jewish guys - you know, wearing the black suit and stuff. So to me, still as an Oregonian a little bit like - I don't really know the world too well, but Adam felt really comfortable with it by then. But he ends up calling, I think, that - later that day or the next day after the meeting and saying, hey, I don't think we're going to get that building, but I want to partner with you guys.
And we're like, well, we don't really need a partner. We got money. We're going to - we're building our own thing here. He said, yeah, but I - what will it take? You know, whatever it takes, I want to be a partner with you. And so, you know, we were like, why not? Let's throw out a number, and we'll make it outrageous. There's no chance he'll say yes. But if he does, then, hey, we're fine. Like, we did pretty well. And we had no building. We had no signed lease even. And we proposed a $45 million valuation. And that's pretty high for...
MCKELVEY: ...For a business that is unproven.
MCKELVEY: And so he said yes. You know, he said, OK, I want to be a third partner, and so I'll commit to that, which I think at the time was a little bit scary. But at the same time, it's like, wow, that's a real empowerment to say, OK, now we're going to have all this cash.
RAZ: So he gave you all this cash - huge risk on his part.
MCKELVEY: So he didn't give us the cash.
MCKELVEY: But he committed to it.
MCKELVEY: He gave us some of the cash, a little bit to start and then a little bit more over time. And that's actually a really great story in the sense that he empowered us to think really big because we started out with this valid - this valuation that sort of validated our picture of the future, which was really big. So it was great. And we're still good friends with him, and everything is awesome. But that was the first step and the first money that we took as investment.
RAZ: And then of course over time you got more and more investment, and you expanded. You built more and more of these spaces.
MCKELVEY: Yeah. And I think what we did was we built fast. We built inexpensively, and we turned around deals really quick. And we were successful. You know, we built up credibility because each location that we did worked. And we did what we said we're going to do. You know, we weren't, like, say, a tech startup where it's like, oh, there's some, you know, hockey-stick growth, and all of a sudden we're going to have millions of users or whatever. But we were really clear that we're going to, you know, continue to grow. And the vibe in the buildings was unique. And it was super cool.
And when people came in, they could tell it was something different. Just on walking in the door would be like, wow, this is something I haven't seen before. And that validation of both, you know, the business is successful. It really works. The sort of fundamentals of the business are really good. And then we're like, you know, we're cool guys, and we have a good story. And we're here at the right time. And, you know, those things all added up.
RAZ: Yeah. You know, I mean, I wonder - I mean, you must look at some of these companies like Uber - right - and, you know, some of these big tech companies and, you know, the companies that we think of as giants, right? And, you know, we've had people on the show - people who started companies that don't exist anymore, like Compaq. And that was the fastest company in history to reach a billion dollars in revenue. And it doesn't exist anymore, right?
RAZ: And, I mean, when you think about your company now - I mean, it's valued - what? - 16, $17 billion. And it seems like it could be there forever. But, I mean, do you ever think that, you know, all this could just collapse one day and not be there?
MCKELVEY: You know, it's a great question. One of the things that we're holding onto very tightly is the feeling that we're still figuring it out every day, that nothing we've done so far is the right answer.
RAZ: Do you still feel like a startup?
MCKELVEY: A hundred percent.
RAZ: Even though you're valued at 17...
MCKELVEY: Yeah, but the value is irrelevant - right? - to the business problem. Like, who cares how much money you're worth when you're facing a business problem that is always evolving and that your primary interest is in solving it in a better way? So our primary reason for existing is trying to help other people succeed. So our problem is, like, if they change, we change. And it's sort of symbiotic in that way, right? And that's why I think we don't really have a finish line.
It's not like, hey, we're going to figure out some model, and then we roll it out across the globe. It doesn't work that way for us at all. So that challenge will never stop. We'll have the learning curve forever, which is what makes it awesome. And Adam and I, like, we - when we talked about this, we were like, this is a hundred-year challenge. It's not like, hey, we're building a company so we can sell it and move on. We're doing this because we think this is the most interesting and biggest challenge we can work on, and so let's just keep on it forever.
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RAZ: When you did your last round of financing, of looking for funding, the company was valued at $16 billion, the company that you started in 2010, which is crazy. I mean, do you ever - did you ever - do you ever stop and think, that's just nuts?
MCKELVEY: (Laughter) That's a good question. I don't - it's interesting to think about the times at which these things hit you. And I would say I remember calling my friends when we were first reaching a billion-dollar valuation. Actually, I can remember dinner with one of my best friends when we were at 130. And he was like, oh, my God, 130, like, are you going to sell and retire? And I was like, what? Like, why would I do that?
Like - I'm just - this is so much fun, you know, no chance. When we got to a billion, I remember feeling pretty bashful about even saying the words. Like, I remember almost feeling like, wow, I don't want to send this in a text message because it's going to sound so preposterous. Like, I want to call and only say it verbally...
MCKELVEY: But then, you know, once you cross that threshold, it's sort of like the other one's going from there. And first of all, I wouldn't complain about the fact that I get to live in Manhattan. And I live in a nice apartment. And I'm living - you know, I moved to an apartment with an awesome view. And that's a - you know, a childhood dream to, like, see the New York City skyline. So I've reached those thresholds where I live a great life.
MCKELVEY: And that's awesome. But beyond that, I don't have, like, some big ambition for money. It's not really interesting to me. It's more - again, like, to be on a path where I feel like I get to continue to engage in something. That's what matters.
RAZ: Yeah, it's really interesting because you think about, like, these huge booms like gold or oil or tech. And the companies that really were sustainable, the companies that made money - the most money off of these industries were the ones that serviced them, right? Like Levi's jeans serviced the gold rush and these companies that service the oil rigs or, you know, the companies to build the platforms. You guys are kind of doing the same thing. I mean, there's this tech boom and a boom of, you know, this entrepreneurial spirit. And you kind of said, well, let's services this. Let's provide the service.
MCKELVEY: You know, that's a great way of looking at it. I don't think I've heard it stated that way, but I think it's really true. And it's not just those things, which - I think tech boom is important. But it's also a shift in what people are looking for in their life and what their expectations are from work because there's a major shift happening in terms of young people thinking about going to work every day, and what do they want back from that?
People don't want to punch the clock anymore and then have their life start when they leave the office. They want their life to be integrated. They want to feel like there's value in what they do every day. And that's part of the environment that we create. You know, you can get that - say you're working at Google, Facebook, whatever - super cool office, you know, maybe you feel this vibe. But when you're a small company, or, say, you're working for a bank or one of these places that isn't inherently as cool, you may not get that as easy.
And what we're offering is something where you're an independent worker or you're a small company of two people or you're, like, a division from a pharmaceutical company or a bank. We're giving you that super cool environment where, like, it doesn't feel like you're going to work every day. It feels like you're going to, you know, a cool spot to, like, meet people and connect and collaborate, right? And that's I think the trend that we're working alongside of - less so specifically tech or less so than any other business boom. It's more like a mindset shift.
RAZ: Yeah. It's very interesting seeing you talk about this with confidence in a very sort of clear way. And you - and I'm also seeing you as this kid in this commune in Oregon. And I'm trying to square that circle. It's just - it seems so implausible that, you know, here you are talking about real estate deals, of price per square foot and all this stuff. And I'm - not that it's a bad thing.
RAZ: It's just - right? - I mean, do you ever think that's just implausible?
MCKELVEY: No, primarily because I've been doing all the hard work for the last - I mean, literally from 1996 or whenever it was - '95, when I started architecture school. And I committed to the work. Like, I've worked nonstop since then. And I don't mean, like, literally - I mean, a lot of it was hours. But I mean it more like commitment. Like, I've been committed to the work and interested and engaged with the work since then nonstop. And I think that's part of the thing, is that I found something that I loved to do, and I've felt what it feels like to love what you do. And I've never been willing to give that up. And I've been on that track ever since.
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RAZ: Miguel McKelvey, co-founder of WeWork. By the way, among the six kids who grew up with Miguel in the commune, two are employed by WeWork and another, Sadie Lincoln, founded her own empire, a national chain of exercise studios called Barre3.
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RAZ: And please do stick around because in just a moment, we're going to hear from you about the things you're building.
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RAZ: Hey, thanks so much for sticking around because it's time now for How You Built That. And today we're going to update a story we ran a little over a year ago. And when we first heard about this product, our team actually got into a little bit of an argument because the problem that it's meant to solve - well, some people didn't even know this problem existed. Like, if you have a comforter or a duvet, then you know the extreme frustration of washing the cover and then trying to stuff the duvet back into the duvet cover.
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KRISTEL GORDON: It's as if you're taking a big pillow and trying to fit it into its pillow case. But it's bigger than you are. And you can't...
RAZ: This is Kristel Gordon from San Diego.
GORDON: You have to, you know, get on top of the bed, shake it so that it all fits properly and neatly and it's not all crumpled inside of its cover...
RAZ: And if you've ever had to do this, you know exactly what Kristel is talking about is an enormous pain. And it's something that she had to do when she was a kid. Anyway, now that Kristel is a mom herself, she's always looking for ways to save time. And so one day about two years ago, she thought, hey, why don't I design something that makes it easier to put the duvet back into the cover?
GORDON: It needed to be absolutely simple that is stand-alone. You don't have to hook up any wires or any hooks and doesn't require assembly or any of that.
RAZ: Kristel actually has a background in aerospace engineering. But when it came to designing something to help you make a bed, she didn't even know where to start.
GORDON: Because I had no idea how to invent something. So I started toying with things. I read a book on basically inventing things and bought some stuff from Home Depot.
RAZ: She bought really basic stuff there like rope, some clothespins and a kitchen sponge, which she literally stapled together into kind of clamping device.
GORDON: That was my ultimate first, raw prototype to just test my theory of having this cushion underneath the mattress to work as an anchor and then having clips just hanging onto the corners of the duvet. And then...
RAZ: And what Kristel eventually came up with is a flexible clamp - actually, two of them - that you can use at the top two corners of the bed.
GORDON: The clamps are kind of like - liken it to the hands of somebody else. They're your helping hand.
RAZ: The clamps are shaped kind of like a spatula with this little plastic gate in the middle that can hold the duvet cover in place as you push the duvet into it.
GORDON: And you can do this task alone in a few seconds with very minimal pain and time.
RAZ: A few months after she settled on her final prototype, Kristel found a manufacturer in Turkey to make it, which she calls the Duvaid, D-U-V-A-I-D.
GORDON: There's nothing like it that exists. We have no competition.
RAZ: Since we last spoke with Kristel, she's made a few thousand dollars selling the Duvaid online. And she's in the final stages of negotiating to get it into a national chain. And a few weeks ago, she got the Duvaid patented. She keeps the letter from the Patent Office in a drawer with her kids' birth certificates because, as she puts it, it's also something she gave birth to.
If you want to find out more about Duvaid or hear previous episodes, head to our podcast page, howibuiltthis.npr.org. And of course if you want to tell us your story, go to build.npr.org. And thanks so much for listening to the show this week. You can subscribe wherever you get your podcasts. And while you're there, please do give us a review. You can also write to us at HIBT@npr.org. And if you want to send a tweet, it's @HowIBuiltThis.
Our show was produced this week by Ramtin Arablouei, who also composed the music. Thanks also to Nour Coudsi, Neva Grant, Sanaz Meshkinpour and Jeff Rogers. Our intern is J.C. Howard. I'm Guy Raz, and you've been listening to HOW I BUILT THIS from NPR.
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